Financial Planner Outlines Strategic Mortgage Payoff Guidelines

Kathryn McCall, a vice president and financial planner at CAPTRUST, advises that the decision to pay off a mortgage depends on an individual's specific interest rate, tax situation, and life stage. She argues that homeowners with interest rates under 4% should consider keeping their loans because such rates are unlikely to be available in the short-term future.

McCall suggests that paying off debt is more advantageous for those approaching retirement to reduce required monthly spending and increase discretionary income. She notes that the decision is also influenced by tax filings; specifically, those using the standard deduction no longer receive a tax benefit from mortgage interest, which may encourage faster repayment.

For homeowners who choose to maintain their mortgages, McCall recommends placing funds in a money market account earning at least 3.6% to ensure their savings outpace inflation.